Friday, 5 March 2010

Luck prevents equality

It's not easy to know whether some people are lucky and some unlucky. I can point to examples of people I have met who seem always to land on their feet and others who get the rough end of the deal more than half the time. In fact I once met someone who had won both the jackpot and the second prize on the national lottery, albeit not on the same day. One might be inclined to think that person extraordinarily lucky. On the other hand an old friend of mine bought his first flat just before the massive property price crash of 1989-1992 and managed to lock himself into a fixed-rate mortgage just as variable rates started to plummet. One might be inclined to think him blighted.

If truth be told, these things are bound to happen some time so these people are statistical proof rather than statistical freaks. Good luck and bad luck happen to us all at different times of our lives and I am sure it is a matter of pure chance whether our overall score in the luck casino is positive or negative. That is not to say that you cannot affect your chance of good things happening. For example, working hard and being polite both bring rewards that are not received by the indolent and rude, but that is nothing to do with luck it is a matter of cause and effect. Luck is a very different thing. It is all about factors that are beyond your control.

I am sure I have been very lucky in my life. Three examples spring to mind.

When I was first called to the Bar I couldn't afford to go into pupillage (the year-long apprenticeship you have to undertake in order to be able to practice as a barrister) because it was unpaid in those days and I had no money. I was taking a medicinal beverage one evening and overheard someone say that a particular private law college regularly recruited new lecturers at that time of year. I applied and was given a chance to prove myself. Had I not been at that particular watering hole on that particular evening and had I not been within earshot of that particular conversation, it doubt that I would have even thought of applying for the job.

After three years teaching full-time I went into pupillage and, after serving my year, applied for a place at the same set of chambers. I had one serious competitor whose support was much diminished by his strongest supporter dying just a few weeks before the decision was made whether he or I should become the junior practitioner. Had that man not died I suppose I might have been chosen anyway but my passage was eased by an event entirely outside my control.

In 1993 the London property market was at rock bottom. Two of my best friends owned the property that is now FatBigot Towers and needed something larger. They found the perfect place not far away so I helped them by buying their old shack. Since then the market has shot up to a level that is, to my mind, utterly absurd. Nonetheless, by being in the right place at the right time I have a capital asset with a current market value far above what it would otherwise be. And, to add a further twist, the government's desperate desire to chase the homeowner vote means policies have been targeted at maintaining artificially high prices. Were I to scale-down now, as I might, I would make a nice profit. Not so had I bought, say, twenty years earlier and faced the 1989 recession rather than the 2009 recession.

These three examples of personal good fortune highlight three different aspects of luck. The first was entirely a matter of being in the right place at the right time - the opportunity I enjoyed would simply never have appeared otherwise. The second was a matter of enjoying an advantage due to an external event that disadvantaged someone else. The third is a matter of government policy happening to benefit someone in my position whilst causing problems for others (particularly younger people who cannot afford to buy their own home). The common theme is that the events from which I benefited were outside my control.

One of the most serious flaws in egalitarian political theories is that they can only work if they negate luck. How can they do that? One or two obvious steps can be taken such as abolishing the national lottery, the football pools and all other forms of gaming and gambling. It doesn't take a genius to work out that betting will just go underground if that were done. But that covers only one aspect of the effect of luck, namely businesses that trade on people seeking luck.

Nothing can be done to prevent someone being in the right place at the right time such that he enjoys a benefit that others might be better qualified for but never hear about. Nothing can be done to combat the good fortune of a competitor suffering a blow through an external event that is no fault of his.

Everything can be done about government policies that provide a benefit to some but not others, however nothing will be done about them for so long as there are votes in that benefit. Current policies to maintain house prices at artificially high levels suit me to a tee despite being implemented without the intention to deliver any benefit to me at all. Maintaining house prices is not aimed at me, it is aimed at the potential Labour voter who bought at the height of the market and will be very angry and disillusioned to find himself with a home worth less than the amount he borrowed to buy it. Nonetheless it is not the man who borrowed £125,000 to buy a house now valued at £125,000 who gains, it is a crusty old fart like me who bought many years before, saw the nominal value of his home rocket because of the false credit boom and now sits on lots of equity because the government is scared of losing the vote of the other chap.

Policies aimed at combatting luck will always have consequences. They might prevent the chap with the £125,000 house suffering a capital loss today. That's fair enough, I wish him no ill-will. But they will maintain my windfall profit and will make no difference to the youngsters for whom a £125,000 house is a fanciful dream. Would it be fairer for Mr £125,000 to face a 25% fall in capital value while he has 20 years to pay it off or hope for an up-turn, me to face a 25% fall in capital value and the youngsters have a sporting chance to own their own home? I don't know. Maybe it would, maybe it wouldn't, I'm inclined to think it would.

Very much the same point applies to other policy areas. Combatting discrimination on the grounds of pigmentation or gender is one thing. That seeks to achieve equality of opportunity. True equality of opportunity can never be achieved because there will always be someone who overhears a job opportunity while someone better qualified does not. And there will always be someone who cannot put forward their most important reference because the referee fell under a number 23 bus just before putting pen to paper. What can be done is to level the playing field in other ways.

When you go one step further and seek to achieve equality of outcome you are doomed to failure. Not only can it never happen because different people have different abilities, but you simply cannot legislate against good or bad luck. Some idealists think you can. They think decisions should be taken by an elite group of the super-wise or be delegated to a body charged with applying the criteria laid down by the super-wise. The problem? It's obvious, those who propose the plan appoint themselves to be the super-wise - it can't be anyone else because it was their idea. They might start out with the very best of intentions but they do not and cannot have minds unimpeded by personal preferences and consciences unable too resist temptations wrapped in flattery.

Far better to face reality and accept that some people win the lottery and some don't, some make good bargains and some don't, some are in the right place at the right time and some never are. That's life.


Jim said...

Luck is a question of probabilities. Statistically you do not know how many things you have missed by chance - in the pub round the corner there may have been a man talking to his companion about a better job going at his law firm for example. You might have ended up in an entirely different career and life, 'better' than you have now. Because what happened, happened, you ascribe it importance, but in the billions (trillions?) of human and physical interactions in our lives, we have no way of knowing what might have been.

Plus I'm convinced a lot of luck is down to forethought, or lack of it. I would say I have been lucky in life, but I also know I am the sort of person who thinks things through (probably too much) before doing things. I try to predict the negative things that can happen, however unlikely, and cover myself. Whereas a guy I know is constantly having bad luck, but he is an impetuous chap, who never thinks before he acts. Again its statistics - if you constantly put youself in situations with the possibility (however small) of a negative (unlucky) outcome, then eventually your number comes up.

However small the chances, some things will happen to someone - when HMS Hood was sunk by the Bismark in the North Atlantic it had 1418 men on board. You would have thought, given it sank in 3 minutes, no-one would have survived. Yet 3 men did.

Mark Wadsworth said...

1. Indeed. Only what you call 'luck' other people might describe as 'eavesdropping', 'bumping off opponents' and 'taking advantage of your friends'. To be fair, I have also been very lucky in life (I just stopped doing the things I wasn't lucky at).

2. I appreciate the dig at our government's Home-Owner-Ist policies. The gimmick being that they young people for whom a £125,000 house is only a dream are actually being made worse off in order to preserve existing 'capital' gains.

3. And yes, of course there will never be equality of everything, so what? But success is overrated - some people claim that they are successful because they 'work hard'. Who's to say that they weren't just lucky enough to inherit the 'work hard' gene? is it not better to just have a bit of redistribution from the lucky to the not so lucky and have done with it?